Life after oil: How Better Off are we?

“It is difficult to walk far in Equatorial Guinea without tripping over a contradiction. This small, oil-rich country on the west coast of Central Africa is afloat in oil money. A new monument, glass high rise, or presidential mansion seems to appear each day, often right next to rusted shacks or polluted streams. Sharply-dressed government officials drive flashy Mercedes Benzes through the slums of Malabo, the country’s capital, trying to miss the worst of the city’s potholes.

– Joseph Kraus, 2013

Revenues obtained from oil, if abused, squandered or spent on ‘silly’ projects can entrench poverty. The situation in Equatorial Guinea, one of the five oil producers in Sub-Saharan Africa offers a perfect imagery of how big money can get locked up in fewer pockets. With the highest gross national income in Africa of US$21,000, a larger proportion of Equatorial Guineans are still crying for the “luxury” of good nutrition, decent housing and quality basic education. The 2015 Human Development Report by the United Nations which measures social and economic development, ranks the country 138 out of 188 countries.

Perhaps it is the prevailing suffering of the masses in Equatorial Guinea which drove advocates for the 2.3m Ghanaians in the Western region to influence the spending of petroleum revenues emanating from the Jubilee field, for the prosperity of inhabitants in the region.

However the petition by chiefs in the Western region for a 10% stake of oil revenues for localized development was rendered void by Parliament on constitutional basis. Section 257 (6) of the 1992 constitution of Ghana states “every mineral in its natural state in, under or upon any land in Ghana, rivers, streams, water courses throughout Ghana, the exclusive economic zone and any area covered by the territorial sea or continent shelf is the property of the Republic of Ghana and shall be vested in the President on behalf of, and in trust for the people of Ghana.” Their hopes were however bolstered by political rhetoric during the 2008 general elections. MyJoyOnline of August 31, 2008 reports the then Vice Presidential candidate Mr John Mahama promising the region that his party (NDC) would use 10% of the oil revenue to develop the Western region. Two years later, four NPP MPs in the persons of Kwabena Okyere Darko-Mensah (Takoradi), Dominic Nitiwul (Bimbilla), Gifty Kusi (Tarkwa-Nsuaem) and Dr. Matthew Opoku Prempeh (Manhyia) proposed amendments to the Petroleum Revenue Management Bill to make provision for a Western region development fund into which the 10% of oil revenue will be channeled.

Though there are indications that infrastructure provision and other investments in the region amount to the 10% stake requested, their transformational impact on livelihoods in local communities remains in contention. In her policy brief on expectations management and tensions in Ghana’s oil-rich Western region (2012), Joana Osei-Tutu observed that road infrastructure in the coastal towns are in a bad state and residents have difficulty accessing health facilities especially during the rainy season. Oil rigs have made catchment areas for farming and fishing activities out of bounds and the use of powerful lights at the rigs has plunged fish stocks; causing unemployment and anger. The influx of foreigners and boom in oil-related economic activities have raised cost of living beyond the reach of the natives.

Buttressing Osei-Tutu’s work is a 2015 survey undertaken by the Institute of Statistical, Social, and Economic Research (ISSER) on how oil production has affected livelihoods of communities in Ghana. The survey reported that 79.6% of 2,482 respondents nationwide were of the view that the cost of living has increased over the last three years (75.6% from the Western region shared this view). Electricity costs in the region increased by 146% for the five years of 2009-2013. Within the same period, 39% of respondents said their living conditions have deteriorated whilst 44% said their living conditions have improved both slightly and greatly.

When livelihoods have been disrupted and living conditions significantly affected, it becomes difficult to manage expectations; people want compensation for their losses. The US$3.2 billion oil revenue accrued from 2010 to date is well-intended to engineer social and economic progress. But has expenditure from this revenue made us better off?